Nothing to do with them being automated advisers. Just ordinary marketing deception.
"Wealthfront improperly re-tweeted prohibited client testimonials, paid bloggers for client referrals without the required disclosure and documentation, and failed to maintain a compliance program reasonably designed to prevent violations of the securities laws."
"The performance comparisons were misleading because Hedgeable included less than 4 percent of its client accounts, which had higher-than-average returns."
“Wealthfront disclosed to clients employing its tax-loss harvesting strategy that it would monitor all client accounts for any transactions that might trigger a wash sale – which can diminish the benefits of the harvesting strategy – but failed to do so. Over a period of more than three years during which it made this disclosure, wash sales occurred in at least 31 percent of accounts enrolled in Wealthfront’s tax loss harvesting strategy.”
This seems like an actual error related to being a roboadviser.
Not really. This has more to do with the fact that whatever you state you do as part of your service, you should comply with actually doing. If Wealthfront said “from time to time...we monitor...” it may have been ok. Wealthfront’s testimonials were second to none, and largely against what would typically be allowed so it seems like Wealthfront escaped pretty lightly versus alternative punishments the SEC has used in other cases.
Well, sure, that's broadly true. But the specifics are relevant and the actual false statement made is related to the business of being a robo-advisor (TLH & monitoring for wash sales).
"Wealthfront improperly re-tweeted prohibited client testimonials, paid bloggers for client referrals without the required disclosure and documentation, and failed to maintain a compliance program reasonably designed to prevent violations of the securities laws."
"The performance comparisons were misleading because Hedgeable included less than 4 percent of its client accounts, which had higher-than-average returns."